LIBRARY/TAX SOFTWARE

LIBRARY/TAX SOFTWARE; Tax Software: Good Company for a Tough Task

By STEVEN E. BRIER

Published: February 4, 1999

FROM the wonderful folks who gave you those ubiquitous H & R Block storefronts comes Kiplinger Taxcut, in both desktop and Web versions.

Like most of the desktop packages, Kiplinger Taxcut uses an interview to gather information and then enters that information in the correct tax form. Also like most packages, it allows users to bypass the interview process and enter the information directly, something not for the faint of heart. A nice added touch is the ability to pull into what the program calls the ''fast lane,'' where the user can bypass queries and go straight to selecting topics and forms.

The program installed quickly, although the registration process was somewhat painful, gathering more marketing information than I thought was necessary and allowing registration only through a dial-up connection, fax or snail mail. Users cannot register through an Internet connection, which seemed like a strange and unfortunate oversight.

It would have been nice to check for software updates before starting the interview process rather than waiting until going through a half-dozen screens. It was also a bit perplexing when the program claimed that it had found my previous year's Taxcut form and offered to import some of the information because I had not used the program before.

Taxcut correctly located and imported data from the tax program I used last year, which was Turbotax, and it can call in data from the major personal financial programs, saving some retyping of information. It even found possible deductions in the process. But based on last year's data, it insisted on putting some Schedule C expenses into Schedule A, where they had been last year. Once it got past those minor glitches, the program sailed.

The interview process was simple, focusing on areas that seemed to matter the most, like whether you qualify for the child care credit, while still offering the opportunity to look at other options. It had the best explanation of Roth I.R.A.'s I have seen, and a calculator to help decide if it was worth converting existing I.R.A.'s to Roth I.R.A.'s, a feature I did not find in other programs.

The screen has been laid out sparsely and has a big fat Help button on every screen. Also handy was a drop-down Tools list with a link to such things as the Windows calculator. The program also looked at the entry in the ''occupation'' field and suggested other potential deductions. Unfortunately, the Internal Revenue Service has changed its business codes, and for those people who need to report outside income, perusing the list of business codes is slow and painful. Look it up elsewhere first.

At $34.95, the deluxe Windows version of Taxcut costs $15 more than the standard version, but the deluxe version allows you to file electronically and install all the state versions you need at no extra cost. The Macintosh version costs less, but you must purchase the state versions separately. Also, the Macintosh state version covers only 10 states; the company said those states were the ones with the most complex taxes. Street prices for this program are often lower than the manufacturer's suggested price, which makes it a bargain.

For those who do not need the full-feature set of Taxcut, a simpler version is available free through the Web (www.taxcut.com), but it is only for filers planning to use the 1040EZ form. You enter information directly into the Web version; nothing needs to be loaded onto your computer.

Gene Goldenberg, vice president and publisher of the Taxcut line at H & R Block, said he saw the Web service as a way to attract new customers.

''Our feeling was that this was advantageous to help them out now,'' Mr. Goldenberg said. ''Hopefully they will remember us when their return gets more complicated.''

Those using the 1040EZ product can log on, enter their data and file electronically at no charge. This is partly good marketing and partly an effort to keep the I.R.S. happy. This, and a similar program from Intuit, come from a push by the I.R.S. to have 80 percent of all returns filed electronically by 2007. Providing this free Web service helps with Taxcut's market share and keeps the I.R.S. happy, usually a good thing.

For the many users who have returns more complex than the EZ can handle, Taxcut offers its more muscular products. They can be purchased and downloaded at the site.

''We don't feel that there is enough demand for the full product on the Web,'' Mr. Goldenberg said. ''When you come to taxes, it's the big enchilada. People are really touchy about that.''